West Cork co-ops create 2020 milk price gap

Differences beginning to emerge between milk processors across the country as milk heads for peak, writes Jack Kennedy.

Jack Kennedy

22 April 2020

West Cork co-ops create 2020 milk price gap

Farmers will be hoping that co-ops can hold March prices for April as the spring flush commences.

While only the second significant month of supply for most Irish suppliers, already a gap is emerging between the west Cork co-ops and the chasing pack. All four west Cork co-ops paid out the 1.5 c/l top-up on base price that comes from the Carbery stability fund. Carbery says the fund is farmer’s money that is held for a maximum of three years. It started back in 2014 and at one time was topped up to €10m. Our understanding is the fund source is a mix of profits held over that are not distributed. It’s not money held back from farmers when milk price is high.

While only the second significant month of supply for most Irish suppliers, already a gap is emerging between the west Cork co-ops and the chasing pack.

All four west Cork co-ops paid out the 1.5 c/l top-up on base price that comes from the Carbery stability fund. Carbery says the fund is farmer’s money that is held for a maximum of three years. It started back in 2014 and at one time was topped up to €10m. Our understanding is the fund source is a mix of profits held over that are not distributed. It’s not money held back from farmers when milk price is high.

Aurivo is the best of the rest this month. It has a 1.4 c/l early calving bonus and also it didn’t drop base price as much as some others. Dairygold also has a 1c/l unconditional March bonus so that keeps it in contention at the top despite the 2c/l cut to base price.

Glanbia, Kerry, Arrabawn and Lakeland all cut between 1.6c/l and 2c/l.

The March monthly milk league reflects the milk prices paid to farmers in the last two weeks

The two Tipperary co-ops, Tipperary Co-op and Centenary Thurles, prop up the bottom of the main table similar to last month. If we compare what the Tipp lads got to the west Cork lads, there is €1,500 of a difference in the March cheque. For an 80-cow herd, it is typically €13,500 in west Cork compared to €12,000 in Tipperary.

The March monthly milk league reflects the milk prices paid to farmers in the last two weeks.

Ornua gap widens

The March Ornua PPI was announced at 30.2 c/l while the average paid by the big six co-ops is 29.1 c/l, meaning there is still a significant 1.1c/l gap between them.

This tells us that potentially the co-ops are hedging their bets slightly and taking a bit more off price than the March market prices suggested.

Alternatively other parts of the co-ops’ businesses (liquid milk, agri stores etc) might need reinforcing and boards have decided to enforce an early hit to March price. Small north Cork co-op Boherbue was due to meet as we went to press so we have no details for it this month.

Global markets

Product prices at GDT fell this week after a small rise two weeks ago. The average selling price of whole milk powder (WMP) fell by 4% to just over $2,700/t (€2,490/t). Skim milk powder (SMP) prices fell 5% to $2,380/t (€2,190/t). Butter prices were also down 4% this week to just under $4,120/t (€3,795/t).

Cheddar bucked the trend, with average prices rising by 2% to $4,480/t (€4,125/t).

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